Austin Council Votes to Boost Worker Cooperatives

As policymakers around the U.S. continue to consider how to support entrepreneurship in ways that generate widely shared wealth across all lines of race, class and gender, many have been eyeing worker cooperatives.

In late March, Austin City Council passed a cooperative business ordinance, which primarily supports the idea of worker cooperatives — businesses that are owned and democratically controlled by workers — as a key part of the city’s economic development strategy moving forward.

“The worker cooperative model has proven to be an effective tool for creating and maintaining sustainable, dignified jobs; generating wealth; improving the quality of life of workers; and promoting community and local economic development, particularly for people who lack access to conventional means of business ownership,” the ordinance reads. It directs the city manager to develop recommendations to support local worker cooperatives, particularly ones that target areas of need in Austin such as food deserts. It also directs the city manager to review the city’s Small Business Program loan applications and other materials to ensure worker cooperatives can access those on the same basis as comparable conventional businesses. It even directs the city manager to develop recommendations on how to reach out to existing business owners and present worker cooperative conversion as a retirement or succession plan for older business owners. There’s also a directive for the city manager to review city procurement and contracting procedures for any possible barriers to worker cooperatives to bid on city contracts.

Last year, Rochester Mayor Lovely Warren moved forward a program for her city that took inspiration from Cleveland’s Evergreen Cooperatives model, where worker co-ops were tied directly as vendors to anchor institutions like hospitals and universities. The Rochester program just launched its first worker cooperative, the Democrat and Chronicle reported last week.

In New York City, the city council is in its third year of investing in the city’s ecosystem of organizations that support, train and provide capital to worker cooperatives.

The Working World, a NYC-based nonprofit fund that has invested in over 200 worker cooperatives around the world, co-founded a national peer network of worker cooperative assistance organizations. That network is also building a national revolving loan fund to provide a shared source of capital for the network and a “one-stop shop” for those who want to invest in worker cooperatives. While it’s still in the very early stages, the peer network is already responsible for a loan to Taharka Brothers Ice Cream, owned and operated by black youth in Baltimore.

“Our theory is that if we can have these five funds or 10 funds or 15 funds all across the country, that are working locally, working regionally but are aggregating their needs for debt capital and for grant capital, then we’re able to go after much larger investments, we’re able to go after institutional investments,” said Kate Khatib, a member of the peer network, for a 2016 Next City article on their national revolving loan fund.

Oscar is Next City's senior economics correspondent. He previously served as Next City’s editor from 2018-2019, and was a Next City Equitable Cities Fellow from 2015-2016. Since 2011, Oscar has covered community development finance, community banking, impact investing, economic development, housing and more for media outlets such as Shelterforce, B Magazine, Impact Alpha, and Fast Company.